The Nordics are often viewed as one of Europe's most resilient buyout markets. But at last week’s Nordic Private Equity Conference in Copenhagen, the region's executives were agreed on one thing – they are not immune from the malaise facing the wider European economy.

The conference highlighted that for all the differences between Europe’s buyout firms, many of the challenges facing them are universal. Here, Private Equity News details the five major themes from the conference:

“Nordic strength” is a bit of a myth

In Norse mythology, the god Thor was known for his extraordinary powers and his almighty strength. In recent years, the Nordic region’s buyout market has been held up as a beacon of strength across Europe by many executives across the eurozone and the UK – yet according to executives in the region, the Nordic private equity market is perhaps not as healthy as it appears to an outsider.

Ole Steen Andersen, chairman of the Danish Venture Capital and Private Equity Association, gave a rather downbeat opening keynote speech at the conference, talking about the “changing of the financial playing field” brought about by European regulation including the Alternative Investment Fund Managers Directive, while other factors covered in the conference struck a similar chord to themes heard at the British Venture Capital Association Conference held last month.

The region’s firms are worried about carried interest

Given the unrelenting pressure faced by buyout firms across the world on the thorny issue of carried interest, it is perhaps unsurprising that Nordic executives are concerned about an increase in tax on carry.

The Swedish government has challenged private equity firms over their carried interest being charged as capital gains tax, with Nordic Capital and IK Investment Partners facing particular pressure, while Danish firms have faced similar scrutiny.

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Listing each Nordic country’s individual tussle over carried interest, Steen Anderson called on Nordic politicians to work on a more stable tax system in order to attract foreign investment.

Exits are tough

Morten Hummelmose, a partner at EQT, one of the region’s largest buyout firms, admitted that the exit environment was tough for Nordic private equity firms. He said the requirements for Nordic IPOs were “getting tougher”, and said public markets exits had become “less attractive” over the last few years.

Kristian Bagger, managing director at boutique investment bank Moelis & Company, said there needed to be more “realism in the mind of the seller” in the region – noting that this was affecting the number of deals getting across the line in the region.

Bagger’s thoughts correlate with the latest data from the Nordic region. According to data provider Dealogic, the value of Nordic deals fell by a third in the second quarter of this year. Bagger said the current situation was unfortunately “the new normal”.

Fundraising conditions are tougher

The decision by Nordic Capital, one of the Nordic region’s best known buyout firms, to reduce its fundraising target by about €1bn earlier this month, demonstrated that the region’s fundraising market is not immune from the problems facing the UK or eurozone.

Though Nordic Capital was not mentioned by name at the conference, many private equity executives, advisers and fundraising placement agents said fundraising conditions had worsened over the last year.

Gareth Whiley, partner at UK mid-market firm Silverfleet Capital, who handles the firm’s investments in the Nordic region, said firms had to be “very specific about what they were going to do” with LPs’ money. He said: “I’m sure there is too much money in the Nordic region. We’ve seen an enormous increase in [fundraising] activity, particularly in Denmark.”

Interest from Asian trade buyers is intensifying in the Nordic region

There were bright spots for the private equity industry to take from the conference, however, as several executives noted an increase in interest from Japanese and Chinese trade buyers for private equity assets.

Moelis' Bagger said there was “a surprising number of companies are being sold to Asian trade buyers” by Nordic private equity firms. However, he warned that “bespoke” processes were needed in order to increase the chances of a successful deal, due to the cultural difference between Nordic and Asian firms.